Correlation Between Power Integrations and Aeluma

Can any of the company-specific risk be diversified away by investing in both Power Integrations and Aeluma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Power Integrations and Aeluma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Integrations and Aeluma Inc, you can compare the effects of market volatilities on Power Integrations and Aeluma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Power Integrations with a short position of Aeluma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and Aeluma.

Diversification Opportunities for Power Integrations and Aeluma

0.07

Correlation Coefficient

Power Integrations  Aeluma

Significant diversification

The 3 months correlation between Power and Aeluma is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and Aeluma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeluma Inc and Power Integrations is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Power Integrations are associated (or correlated) with Aeluma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeluma Inc has no effect on the direction of Power Integrations i.e., Power Integrations and Aeluma go up and down completely randomly.

Pair Corralation between Power Integrations and Aeluma

Given the investment horizon of 90 days Power Integrations is expected to under-perform the Aeluma. But the stock apears to be less risky and, when comparing its historical volatility, Power Integrations is 3.49 times less risky than Aeluma. The stock trades about -0.02 of its potential returns per unit of risk. The Aeluma Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  248.00  in Aeluma Inc on September 23, 2024 and sell it today you would earn a total of  602.00  from holding Aeluma Inc or generate 242.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Power Integrations  vs.  Aeluma Inc

Power Integrations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Integrations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Power Integrations is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Aeluma Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeluma Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Aeluma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Integrations and Aeluma

The main advantage of trading using opposite Power Integrations and Aeluma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations position performs unexpectedly, Aeluma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aeluma will offset losses from the drop in Aeluma's long position.

The idea behind Power Integrations and Aeluma Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.